Regional Trade Agreements vs. Global Trade Liberalization

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Regional Trade Agreements vs. Global Trade Liberalization

There is much debate concerning regional trade agreements and global trade liberalization. Pros and cons can be found for each trade policy. After looking at several arguments for and against regional trade agreements, it seems that overall regional trade agreements are more beneficial when compared to global trade liberalization.
A regional trade agreement is “where member nations agree to impose lower barriers to trade within the group than trade with nonmember nations,” (Carbaugh, p 529). Regional trade agreements don’t affect each nations domestic policies, it only creates increased trade and relations among certain nations. This type of trading system complements
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He argues that liberalization opens up free trade among all nations and does not encourage the formation of groups. Trade agreements, on the flip side, encourage nations to ban together and offer special discounts to one another.

Colorado State University-Global Campus. (2014). Module 5: Regional Trade Arrangements, International Factor Movements, and MNCs [Blackboard Course]. In ECN 500 – Global economics (pg. 1). Greenwood Village, CO: Author. The module content provided by Colorado State University-Global Campus discusses regional trading agreements. It states that the tendency to use negotiation and organization of free trade had been undermined by regional trading agreements since the 1980s. Furthermore, CSU-Global argues that regional trade groups strengthen trade and the benefits of the groups involved. On the other hand, it undermines free trade by discouraging trade with members not part of the group.

Fratianni, M., & Chang Hoon, O. (2009). Size of regional trade agreements and regional trade bias. Applied Economics Letters, 16(16), 1603-1606. doi:10.1080/13504850701604110 In Fratianni and Hoon’s work, they examine the importance of size when dealing with regional trade agreements. They found, by analyzing 143 countries over 20 plus years that regional trade biases decline with the size of the partnership. In addition, their work argues that regional trade agreements

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